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Commodities are considered alternative investments that are great for portfolio diversification and hedging against inflation. Just like with stocks or bonds, you can invest in commodities and commodity futures through a brokerage. Commodity brokers act as middlemen between investors and the commodity market while offering a level of expertise and risk management to clients.
Best Brokerages to Trade Commodities
- tastytrade: Best for low-cost futures
- Interactive Brokers: Best for global trading
- Tradeworks: Best research strategy database
- NinjaTrader: Best for trading tools
- eToro USA: Best for commodity ETFs
- E*TRADE: Best for margin traders and IRAs
- Goldco: Best for buying gold
- Charles Schwab: Best for education and expert research
- TD Ameritrade: Best for beginners
Commodity Trading Company Reviews
The best brokers for buying commodities offer a diverse range of investments, low contract fees, accessible interfaces, and advanced charting features and tools. Experienced investors can trade commodity futures, options, ETFs, and mutual funds through online brokerages. In general, only advanced traders with a high-risk tolerance should invest in commodities. However, some brokerages with beginner-friendly educational resources may be suitable for new investors.
The following futures and commodities brokers offer some of the best investment options, account features, educational resources, and fees for futures and commodities brokers. Before jumping in head first, make sure to thoroughly compare the different brokerage offerings and features to make sure you pick the best one for you.
tastytrade
tastytrade commodity futures span over multiple asset classes, including futures, micro futures, small futures, small futures options, and futures options. Opening commissions per contract for futures range from $0.25 to $2.50. Closing commissions per contract range from $0.00 to $1.25. Moreover, you can utilize tastytrade's Trading Pairs feature to balance out your investment portfolio. For example, you can invest in the gold and silver ratio, energy pairs, or grain pairs.
Interactive Brokers
With an Interactive Brokers account, you'll get access to multiple features, including futures trading tools like:
- ComboTrader: Investors can choose from various pre-established programs for executing futures trades or create their own proprietary combination order strategies.
- SpreadTrader: This is a command center for managing futures positions. It's integrated with Interactive Brokers' Trader WorkStation (TWS) feature.
- Index Arbitrage Meter: This measurement tool is designed to analyze index arbitrage strategies. It illustrates the spreads between feature contracts and spot prices.
Tradeworks
Although Tradeworks doesn't offer commodity trading directly, the platform can assist you in designing, testing, running, and analyzing trading strategies. Some of the best features include the Algo editor, the improved backtest tool, and the advanced performance analytic feature for real-time analysis of your trading strategies.
Tradeworks has four account options:
- Incubator plan: For $9 per month, you won't get access to any trading accounts or active robots. But you can still access 10 backtests per day.
- Solo plan: For $49 per month, you can open one trading account and one active robot, plus 30 backtests per day.
- Trio plan: For $99 per month, you can open one trading account and three active robots, as well as 100 backtests per day.
- Octet plan: For $199 per month, you can open three trading accounts and eight active robots, as well as unlimited backtests per day.
All plan options are eligible for a 14-day free trial period.
NinjaTrader
With NinjaTrader, you can trade commodity futures like agriculture futures, metal futures, natural gas futures, forex futures, crude oil futures, stock index futures, crypto futures, and interest rate futures. Regular futures commissions start at $0.59 per contract and $0.90 per contract for micro futures.
eToro
With eToro you can invest in commodity ETFs such as the United States Gasoline Fund (UGA), iShares Silver Trust (SLV), SPDR S&P Oil & Gas Exploration & Production (XOP), GraniteShares Gold Trust (BAR), PowerShares DB Oil Fund (DBO), Direxion Daily Gold Minor Index (DUST), and Direxion Daily S&P Oil & Gas Exp. (DRIP).
E*TRADE
To trade futures, you must have an E*TRADE margin-enabled brokerage account or an eligible IRA. You'll get 24/6 access to markets (from Sunday 5 p.m. CT to Friday 4 p.m. CT). Other features include no short sale restrictions, mobile access, formulated trading strategies, a suite of drawing tools, and access to E*TRADE's Futures Research Center.
E*TRADE also offers commodity ETFs that almost exclusively invest in commodity assets like agriculture, energy, or metals. There are no additional trading fees for ETFs.
To open a margin account with E*TRADE, you must have at least $2,000 in your account. IRAs have a $500 minimum to open an account. That means before you can invest in commodity futures or ETFs, you must at least deposit $500 in your account. If you don't want to invest in an IRA, you'll need to open a margin trading account for a much higher minimum.
Goldco
Goldco is our top pick for the best gold IRA. It allows investors to trade physical gold bullion and gold coins with an IRA, or get physical gold sent directly to them. Goldco also offers silver IRAs, platinum IRAs, and palladium IRAs.
Goldco is one of the industry's most trustworthy gold investing firms with an A+ from the Better Business Bureau and a history of great customer support services. Another perk is that Goldco charges lower fees on greater asset amounts than some competitors.
Goldco allows you to fund your account with rollovers for 401(k)s, 403(b)s, IRAs, thrift savings plans, and savings accounts. The firm can also convert gold assets into cash for you. On the downside, you'll need at least
Charles Schwab
Although contract fees for futures are higher than with similar brokerages ($2.25 per contract), investors will get access to Charles Schwab's vast range of research tools. This includes Schwab's Futures Research Center, daily analysis on the futures market, access to independent analysis from the Hightower Report and Wyckoff Report, as well as daily videos from futures experts.
TD Ameritrade
TD Ameritrade offers commodity futures for metals, energies, agriculture, currencies, softs, stock indexes, interest rates, cryptos, and micros. You'll pay $2.25 per future contract.
The brokerage offers a range of educational resources about futures investing basics, as well as resources on maximizing capital efficiency, how futures compare with stocks, and much more. Beginner investors can benefit from TD Ameritrade's "Fundamentals of Futures" course, which provides demos, videos, and quizzes on futures trading and related topics.
Commodity Trading FAQs
How can I start trading commodities?
You can start trading commodities by deciding whether you want to buy physical commodities, or if you prefer to indirectly invest with commodity futures, commodity ETFs, or commodity stocks. If you want to indirectly invest, you can open an account with a brokerage that offers trading of futures contracts and other alternative investments.
How risky is commodity trading?
Commodity trading is fairly risky due to its volatile nature. Commodity trading is best for experienced investors with a high-risk tolerance.
What is an example of a commodity trade?
An example of a commodity trade is exchanging cash, or another raw or partially refined product/good, in exchange for gold. If you invest in commodity futures, you'll purchase futures contracts with cash in the hope of profiting from changes in the asset's price.
What does a commodity trader do?
A commodity trader is an individual trader or business that assists clients in buying, selling, and investing in commodities like agricultural products, livestock, precious metals, and energy resources. Similar to a stock broker, commodity traders are professionals who trade assets over multiple exchanges.
What can be traded in a commodity market?
In a commodity market, you can trade raw goods, natural resources, and limited-manufactured products such as precious metals, livestock, meats, crops, energy resources, and softs. You can trade physical commodities or commodity assets through indirect trading strategies.
How to Invest in Commodities
Commodities can be directly traded for goods or cash, but there are other ways to invest in commodities. Instead of dealing with the hassle of owning physical gold or cattle, you can indirectly invest through a brokerage account and trade commodity futures contracts, options, stocks, ETFs, and mutual funds.
With commodity futures, the holder of the futures contract must buy or sell a commodity on a specific date for a specific price in the hope of turning a profit. Since futures tend to be volatile investments, individual investors may prefer to invest in options based on a futures contract as holders aren't obligated to sell on a certain date.
Another option to invest in commodities is through stocks, ETFs, and mutual funds. These assets invest in companies that produce or process commodities. Mutual funds and ETFs are great tools for diversifying your investment portfolio and lowering your risk of exposure.
Alternatives to Commodity Brokers
If you're interested in investing in precious metals, you may want to consider buying physical gold in the form of bullion bars or ingots. Unlike some commodities like livestock or agriculture products, physical gold can be easy to store and won't expire. Plus, gold is largely immune to inflation and is a great hedge against economic struggles and disasters. You can buy gold from banks or gold dealers.
You can also invest in some of the best gold IRAs to further diversify your retirement savings and hedge against inflation. But keep in mind that storage fees, custodial fees, and set-up costs tend to be higher with gold IRAs compared to other IRA plans. For instance, annual fees tend to exceed $100. Another thing to consider is that gold IRAs don't usually award dividends or yield high returns.
If you're new to investing in commodities or need help establishing a financial plan, you can find a financial advisor for expert guidance and advice.
Commodities vs. Stock Futures
Commodities are physical assets and goods like crops, energy resources, agriculture products, precious metals, or currencies. Commodities can be bought and sold for cash or other goods. Stock futures, on the other hand, are legal contracts that require the holder to buy or sell a stock or other asset by a specific date for a specific price.
When you invest in commodity futures, you are legally obligated to sell or buy a commodity for a set price on a specific date. You'll make a profit if the spot price of a commodity rises since the seller will still have to sell the asset at the set price. However, commodities are generally volatile assets with high risk.
Commodity Glossary
- Dow Futures Live Stream: The Dow Jones is one of the top stock market indexes, tracking 30 of the most prominent US companies on the stock market. You can use the Dow Futures Live Stream to watch futures trading in real time. You can also access real-time charts, news, futures analysis, and more.
- Commodities: Commodities are tangible, publically traded goods or assets, such as agricultural products, precious metals, energy resources, livestock, meats, and more. You can invest in commodities directly or indirectly through a brokerage.
- Commodity Market: Similar to the stock or bond market, the commodity market is a market that trades raw and primary goods and products. For example, the commodity market can trade soft commodities like wheat, sugar, coffee, or cocoa. Another example is metal commodities. which are mined materials like gold or silver.
- Commodity Future: One of the most popular ways to invest in commodities like agricultural goods or mined raw materials is through futures contracts. Rather than investing directly in a commodity, holders are obligated to buy or sell a commodity at a certain for a set price. The best brokers for buying commodities offer a range of commodity futures across different markets.
- Stock Futures Investing: You can invest in stock futures to hedge against inflation and diversify your investment portfolio. Stock futures are available through brokerages.
Why You Should Trust Us: How to Choose a Commodity Broker
We used Personal Finance Insider's methodology for rating investment platforms when reviewing brokers for commodity trading to find the best platforms for low fees, multiple asset options, futures trading tools, and customer service. We also favored platforms that offered a range of other features and products, such as educational resources and account flexibility. Investment platforms are given a rating between 0 and 5.
Commodity Brokerages that Didn't Make Our List
- TradeStation: You can invest in futures for metals, energies, softs, meats, agriculture, and more with TradeStation. However, the brokerage has a complex fee structure and future contracts may be pricier compared to other platforms.
- Plus500: Plus500 is a European broker popular for future trading. It offers a range of commission-free indices, commodities, and currencies for trading across multiple markets. But Plus500 is not available in the US, so US investors should look elsewhere.
- Optimus Futures: Optimus is a discount brokerage for forex and futures trading. It offers self-directed, automated, institutional, and professional trading, and you can open an IRA. The brokerage has a large selection of educational resources and support access for users, but there's a $500 minimum to open an account.
- ActivTrades: ActivTrades is a UK-based forex broker that offers forex trading, shares, indices, crypto, ETFs, commodities, and bonds. However, ActivTrades isn't available for US residents.
- Tickmill: You need at least $100 to open a classic account with Tickmill and access multiple trading accounts, educational resources, and trading tools. Tickmill isn't available in the US and has an outdated platform design.
Compare the Best Commodity Brokers
Here are our top picks for the best brokerages to buy commodities. Compare offerings and find the best offer for you.